Ridiculously Proprietary Incorporated

Sunday, February 10, 2008

I recently watched the movie Sicko (a documentary by Michael Moore about the state of health care in various countries around the world). Currently, citizens of the the UK (United Kingdom), France, and our neighbor to the north, Canada, can all look forward to having free, universal health care for life, something that those of us in America do not have. Despite the efforts of many politicians over the last 20 years, the U.S. still seems no closer to having universal, state-run health care. Why is that? Moore's thought is that it is the government, insurance and drug companies, and the rich of America that are keeping us, the common man, down by demoralizing us through poor health care (among other things). I believe that Michael Moore is sadly mistaken about a great number of things (need more proof? go to MooreWatch.com).

Moore states that people in the UK can look forward to longer lifespans than the average U.S. citizen and it is because of their universal health care (approximately 1 hour into the film). Apparently Moore doesn't understand, among other many other things, the difference between a corollary relationship and causal relationship. In a corollary relationship, two things are somehow related (like, it's hot outside, so people are eating ice cream. Yeah, the heat might have something to do with it, but the day's temperature didn't cause them to eat the ice cream). In a causal relationship, action A actually causes reaction B. Better health care and long lifespans are a corollary because they typically both rise or fall together, but it is not a true causal relationship because good health care doesn't always cause a long lifespan. There are other factors in play.

Could it be, instead, because the U.S. has the largest percentage of obese citizens (at 30.6%), more than the UK (3rd at 23%), Canada (11th at 14.3%), and France (23rd at 9.4%). Now, we all know that obesity is great for you and many obese people live much longer and healthier lives. Of course they don't! It doesn't take a rocket scientist (which Moore is most definitely not) to figure out that if many of the people in a given country are obese, then the average lifespan of the nation will be lower than it should be evenif they have the greatest health care available. If you need more proof, look at this graph. Of the 52 nations ranked by obesity-related deaths, the U.S. is not only number 1, but it is 44% of the related deaths of those 52 nations. (Canada #7 - .027%,UK #17 - .003%, and France wasn't even on the list.)

Michael Moore wouldn't lie to get his point across, would he? Well, I won't accuse him of lying, but I will certainly accuse him of completely bending the truth to make sure that what he thinks is true, "proven" by the "facts" he collects. I'm not claiming to be any different. In fact, I regularly say that my opinion is just that, an opinion. But I also don't use my opinions to make over $30 million dollars ($34 million Box Office Gross + $4 million in DVD sales - $9 million in production costs). Not that I'm against making money; there are ads running on this site right now. But if Moore is trying to "prove" that he has heartfelt sympathy for those without health care, I don't buy it for a second.

I'm no mathematician, but I'm pretty sure that you can afford some pretty good health care if you have $30 million dollars (and that money is from just one film, Sicko). If he really cared for those people in the film (specifically the last 20 minutes or so where he takes a bunch of U.S. citizens to Cuba for free health care), why don't you give the proceeds of your film to those who really need it? Popular instrumental pianist George Winston did just that, not only once (for 9/11 victims), but twice (also for Hurricane Katrina victims). Winston has been a professional musician for over 25 years and has plenty of money to live a good life doing what he loves and I commend him for using his talents to help those in need. I can't say the same for Moore, who cares so much about all of the injured 9/11 rescue workers in his film that instead of giving them money for health care, he takes them to Cuba. Imagine the total cost of flying the workers, Moore, the victims, and the entire camera crew down to Cuba (not to mention hotel and other expenses upon arrival). Wouldn't it have been cheaper and certainly more humane to just pay for the victims' health care costs in the U.S.? But Moore had a point...to exploit the victims in his quest to show how 'poor' the U.S. health care system is. Moore was much more interested in his own ends than the victims' needs.

Not that I disagree with everything Moore stated in Sicko; far from it. Moore says that insurance companies do nothing but deny your claims all day long. While some of that is going on, I'm sure, it is the minority of cases. I've submitted probably 250 claims for office visits and hospital stays and I have never once been denied. Now, I have amazing health insurance, which I pay a lot of money to have (as does my employer), and I still end up with a lot of medical expenses. I've paid thousands in co-pays but in the last two years between the birth of my child, two hospital visits, and numerous other issues, my insurance company has paid out almost $20,000 for health care for my family. Do I sound like someone who has health insurance problems? In fact, I think so highly of the way it has been handled that I'm doing a first for this blog, an endorsement. CIGNA has provided excellent health care for me and I would recommend them to others. Even though I have good insurance, I know there are a lot of people who don't. So while I don't think our health care system is perfect, I certainly don't think that universal health care is the right way to change it. In fact, it is an absolutely horrible idea (despite what many politicians think).

Moore mentions that there are many parts of the U.S. government that are already "socialist" or "universal" systems, like the Post Office, Fire Stations and the Police. In regards to firemen and policemen (that's right, I hate this politically correct garbage), I think you deserve a raise. Those of you who risk your lives everyday to protect our homes, businesses, freedom, and laws, you deserve nothing but the greatest respect an American can give. But I don't think that since the government does a good job fighting fires and sending mail that I'm willing to trust my personal health to them.

Is the USPS (United States Postal Service) really a good example, anyway? The cost of a postage stamp has gone from $.04 in 1958 to $.42 in 2007. Those of you who regularly read this blog know that I'm about to bust out the inflation calculator like I normally do, only this time to make the opposite point I usually make. If the cost of a postage stamp rose at the rate of inflation only, it would be only $.28 today ($.42 is 150% more then $.28).

If the cost (or the amount the government takes out of my taxes that goes toward universal health care) of my health care rises at 150% more than inflation, it isn’t hard to see that this isn’t a good plan. Now I realize that by controlling the entire health care system, the government could create efficiencies (seriously, who are we kidding here, the U.S. Government making something more efficient?) so the average cost of health care would go down. Even if we assume that a universal health care system would make the cost for the average citizen go down, it’s still a stupid idea. Let’s use this example. Guy A makes the U.S. average household income of $43,000 and pays his health insurance premiums (which are usually reasonable) and for long term care insurance. Guy A also eats very well and exercises regularly. At 60 years old, he has not been to a hospital once since birth and rarely goes to the doctor. His health care expenses are a very small part of his total income.

Guy B also makes $43,000 a year, but does not have health insurance. He does not take care of himself physically, and as such is obese. He also rarely goes to the doctor, mainly because he doesn't like the out of pocket expense (who does?), and doesn't realize that he is a heart attack waiting to happen. Not surprisingly, at 60 years old he has a massive heart attack and requires a $500,000 surgery to correct. Guy B sells his house, his car, cashes out his 401k in an attempt to pay for his medical bills. Unfortunately, this only brings him 300,000 and the hospital, which is reimbursed in this case by the government, foots the rest of the 200,000 bill (which is going to, in part, come out of Guy A's Medicare taxes). Guy B is now completely broke, but at least alive. Guy B curses the heavens, "Why me, God! Why can't this nation I live in provide universal health care so I wouldn't have lost everything."

So we have two guys that make the same amount of money, and are the same age, except now one has a good life and the other is destitute, living on welfare since he can no longer work. Do I feel sorry for Guy B and his family? Not a chance. Now, I'm not heartless. I don't want people to go through hardships, but the reason Guy B is in trouble is because he is a complete idiot. He chose to not take care of himself for his entire life, he chose not to have health care, which would have covered the lion's share of his medical bills, and he also chose not to have long term care insurance, which would have provided him money to live on in the event he became permanently disabled and could no longer work.

Why should Guy A now have to pay for the welfare, Medicare, and Medicaid of Guy B, when Guy A did everything right? That is how a socialist system works! I know that some people on welfare actually need it, but there are just as many people like Guy B who had every opportunity in life to make the right choices, but chose not to. I don't think it is right to penalize those that do make the right choices and work hard to pay for them (like myself).

Is there a better way, though? Obviously health care costs are expensive and we need to get them down. Before we worry about the health care system itself, how about taking care of ourselves first? The great inventor Thomas Edison said, "The doctor of the future will give no medicine but will interest his patients in the care of the human frame, in diet and in the cause and prevention of disease." What he means is that we, not the government or even the doctors, need to take care of ourselves by eating right and exercising, not through medicine or surgery. If I had a heart attack, of course I'd go to the hospital and receive any medical treatment (drugs or surgery) that I required; but I really doubt I'll ever have to. My father (almost 60) and both my grandfathers (both almost 80) have never had heart attacks (or any serious health problems) because they took care of themselves, as I have. What?! That would never work, you say? Hmmm, Jack LaLane, a 93-year-old retired fitness instructor in perfect health who towed 70 boats for 1.5 miles at age 70 begs to differ.

Once we've fixed ourselves, health care won't be such a big problem to tackle, because so many fewer people will need it in the first place. Then, instead of Universal Health Care, why not have insurance companies do what they already do? What I mean is, why not treat health insurance like auto insurance? For example, I was in an accident a couple years ago. The insurance adjuster looked at my car, determined it was totaled, and gave me a check for the "market value" of the car. Once I have that check, I can do anything I want with it. I can buy a more expensive car, a cheaper car, or no car at all. Why not make health care the same way?

Every year I go in for a general physical exam. Let's say the nationwide average price is $250. So you tell your insurance company you're going to get a physical and they give you a check for $250. That's it. It's now your money. If you are smart and go to a less expensive doctor, you get to keep the rest. If you'd feel more comfortable with a more expensive doctor that costs $300, you pay $50 out of pocket. It really doesn't have to be any more complicated then that. If the insurance companies just gave blanket checks for say, 80% of what the procedure is currently costing them (hey, we have to give them a reason to do it, too, guys), and the patient was responsible for finding their own care for that amount, I think people would do it. I know I would. It would make more money for the insurance company, probably take less overhead to administer it (even more profits) and the patients wouldn't have any guess work about their medical care. You'd know exactly how much you'd receive for every single medical procedure, without question. You can bet that if doctors knew that you'd look for a bargain, they'd offer one. I mean, look at the ads in retail stores. You can buy the exact same thing at 20 different stores, so they all have to give you a reason to chose them. Think about how great it would be to be a consumer with that kind of power and control over your own health and wellbeing. I'd rather take care of my own health care instead of the government any day of the week.

So who's for a U.S. universal health care system? I am! I am! Or at least I would be if I were a moron. The only people that benefit from universal health care are those who are too stupid to buy insurance, too lazy to work for it, or are trying to get elected by the dumb people who think it's a great idea. Well, now you know better. There are plenty of ways to take care of your family in the existing system (even if it's not the greatest one) and there are some decent ideas on how you can take charge of your own health care. (By the way, there is a system that is starting to head toward the direction I mentioned, called health savings accounts that lets you pay for your health care tax free.)

Besides, if you actually talk to a lot of people in Canada, not just the ones who very conveniently agree with you (like Moore does), you'll find a different story. (The man in the video below would have died in Canada under their universal system if he hadn't been able to come to the U.S.)

After all, if you talk to enough people, someone will agree with you. Take this example: Peter Sparber, a D.C. lobbyist, sent out this letter to some environmentalists telling them that 4,000 Americans died the previous year from "di-hydrogen oxide contamination." Why hasn't our government stopped it?! Because di-hydrogen oxide is water! Hundreds of people wrote to him encouraging him to do everything he could to stop it. This just proves that people will believe anything, because they don't actually check the facts. If he had said, 4,000 Americans drowned last year, no one would have said that water should be banned.

So don't believe something just because important people like Michael Moore or politicians tell you. Research it and make up your own mind. So the next time you see something that you feel isn't being taken care of the way it should, you take care of it. If you wait around for politicians to take care of you, you're going to die waiting....

Thursday, January 31, 2008

Recently I was reading one of my favorite magazines, Fortune. When I was a kid, I used to have a subscription to it (that's right, I was 13 and had my own subscription to Fortune) and my favorite issue was always the Fortune 500 issue in May of each year. The Fortune 500 issue, for those of you who don't know, started in 1955 and chronicles the 500 largest companies in the United States. Nerd that I am, for some reason I love reading the financial stats and attempting to glean interesting facts from them.

Back to the present. I was reading about Walmart in Fortune. Say whatever you want about them; they are growing an absolutely gargantuan company -- $352 billion in sales in 2006, at an 11% growth rate. As I said in my CompUSA Who? article, Walmart has to gain $106 million dollars a day in new business to keep this growth rate up. I've been watching them for ten years thinking, "They can't possibly grow 10% more this year!," but every year they do it again. Many people have conjectured that Walmart's ultimate growth potential won't be much larger than they are today since so many factors are working against them (anti Walmart protesters, administrative overhead, foreign governments not allowing them into their countries, etc...), but I think that history shows us that they can become a 1 trillion dollar company, meaning that such a feat IS possible. In thinking about Walmart's future of growth, it reminded me of a book I read when I was a kid about Andrew Carnegie and another large company that people said couldn't exist.

Andrew Carnegie, whom many know from his most philanthropic donation, Carnegie Hall, was one of the founders (along with JP Morgan, founder of what is now JP Morgan Chase Bank) of the world's first $1 billion dollar company, U.S. Steel. Although it was called the "first billion dollar company" because its market capitalization (or how much its worth on the stock market) was over $1.4 billion dollars ($33 billion in 2006 dollars), its sales were far less. U.S. Steel's sales didn't actually top $1 billion dollars in sales for a single year until 1916.

While a market cap of $1.4 billion doesn't seem that impressive nowadays since Exxon Mobil is worth over $426 billion dollars, let me put this in the proper perspective for you. At the point that U.S. Steel was created in 1901, its market cap was 7% of the US GDP (Gross Domestic Product, or the total value of all the goods and services created by every individual and company in the entire country). If Exxon was worth 7% of the 2007 US GDP (13.2 trillion dollars), it would be worth $924 billion, or a 116% increase from its actual market cap. No modern company will ever be able compare to the sheer magnitude of the U.S. Steel deal in 1901.

Switching gears for just a second, if you look at the link above (2007 US GDP), you'll notice that the U.S. is listed second but still is in first place. That's because the entire European Union (27 countries in 2007) have a combined GDP of 14.6 trillion, which is barely 10% more than the U.S. by itself. So, let me get this straight. The United States is so awesome that almost the entire continent of Europe put together is still barely better then us. God bless the USA, and God bless capitalism. For any who think that socialism or communism are the ways to go, please board the clue train to your right. Capitalism rules! Sorry for that side track, but I love my country.

So in 1916, U.S. Steel sales surpass $1 billion dollars (or $19 billion in 2006). On a side note, U.S. Steel's sales last year were only $14.45 billion, or a little more then two thirds of what they were 106 years ago. Sadly, even once great companies go the way of the dodo bird. Even today though, $1 billion dollars in sales in a year is impressive, but at the time this was an unbelievable feat.

On toward the future, we didn't see the first company hit $10 billion in sales for a single year until 40 years later (General Motors, 1956). It took a further 31 years to hit $100 billion in sales for a single year (General Motors, 1987), a further 13 to hit $200 billion a year (Exxon Mobil, 2000), and a mere 6 additional years to hit $300 billion (Exxon Mobil, 2006). Every successive increment is getting faster and faster. Part of the reason the yearly sales of major companies are growing exponentially like this is because of inflation and the globalization of many major companies like Exxon, GM, and Walmart to name a few. Still, it is very impressive that companies like Walmart can continue growing at the rates they do. So, how long will it be until a company hits $1 trillion?

Based on that growth rate (10%), Walmart would become the first company in history to have $1 trillion dollars in sales in a single year in only 11 years. At that point, 2018, Walmart will only be a 56-year-old company. They would go from $0 in sales to $1 trillion dollars in 56 years. Say whatever you will about Walmart's labor practices, crushing small businesses, or whatever, but you have to be in awe of that accomplishment.

The real question isn't when an estimate shows them hitting that mark, but rather could a single company actual be that big? Would it be crushed under the weight of its own administration? Would the labor issues of running a company the size of a small country make them a political nightmare? Well, I, for one, think that a company can and will be that large.

Walmart as the largest company in the world, currently sells 9% of all the retail goods in the US. While this is a staggeringly high percentage for a single company, they easily have room to grow in the U.S. for a while. Worldwide, they are barely a footprint in any other country. To put it in concrete math terms, Walmarts total worldwide sales are 6/10ths of 1 percent of the worldwide GDP of ($48.25 trillion dollars in 2006). Lee Scott, the CEO of Walmart once said that he thought Walmart had hit 1% of its global potential, and I for one believe him. With the limitlessness of the products Walmart carries (I mean they have their own bank in most stores now!), they can easily grow for years to come.

To me the question isn't if, but when, and will the price of oil drive Exxon's revenues so high that they'll get there first. If Walmart is the first, they might not look like the store we see today. No one would have guessed 20 years ago when IBM dominated the personal computer market that today they would have completely abandoned that market (since selling their laptop division to Lenovo in 2004), and a $1 trillion dollar Walmart might look different. Well whoever does end up accomplishing it, I'll stand steadfast behind the statement that it's going to happen within 15 years...